Cal State Hayward
COST ALLOCATION PLAN
FOR AUXILIARY ENTERPRISES
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REVISION CONTROL
Document Title: Cost Allocation Plan
Author:
Date By Action Pages
08-20-02 Neal Hoss Formal Draft All
Review/Approval History
Date By Action
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Table of Contents
AUTHORITIES ............................................................................................................................................ 4
EXECUTIVE ORDER 753 ............................................................................................................................... 4
STATE ADMINISTRATIVE MANUAL SECTION 8752 ...................................................................................... 4
COST ALLOCATION POLICY ................................................................................................................ 4
AUXILIARY ENTERPRISES DEFINED ................................................................................................. 4
GENERAL FUND SUPPORTED UNITS DEFINED ............................................................................... 4
COST REIMBURSEMENT PRINCIPLES ............................................................................................... 5
COST ALLOCATION METHODOLOGY ............................................................................................... 6
DIRECT COSTS ............................................................................................................................................. 6
INDIRECT COSTS.......................................................................................................................................... 6
FACILITIES .................................................................................................................................................. 6
GOODS ........................................................................................................................................................ 6
SERVICES .................................................................................................................................................... 6
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Authorities
Executive Order 753
(Attachment A)
Chancellor’s Office Executive Order 753, Allocation of Costs to Auxiliary Enterprises, dated July 28,
2000, assigns responsibility to the campus chief financial officer to ensure that “auxiliary enterprises are
charged for allowable direct costs plus an allocable portion of indirect costs associated with facilities,
goods, and services” provided by the campus and funded from the General Fund.
State Administrative Manual Section 8752
Section 8752 of the State Administrative Manual states that “departments (of the state) should recover full
costs whenever goods or services are provided for others” (i.e., non-General Fund entities). The full cost of
goods or services includes all costs attributable directly to the activity plus a fair share of indirect costs that
can be ascribed reasonably to the good or service provided.
(Attachment B)-
Cost Allocation Policy
1. Auxiliary Enterprises will be charged for allowable direct costs
2. Auxiliary Enterprises will be charged for an allocable portion of indirect costs associated with
facilities, goods, and services provided by General Fund supported units
3. Services will be charged to an Auxiliary Enterprise only when there is an incremental cost to the
General Fund supported unit in providing that service
4. An allocable portion of facilities, goods, and services may offset charges to Auxiliary Enterprises
provided to General Fund supported units
5. Costs allocated to Auxiliary Enterprises will be reasonable considering the relevant circumstances
6. Cost allocated to Auxiliary Enterprises will be approved by the Vice President for Administration
and Business Affairs
Auxiliary Enterprises Defined
Auxiliary Enterprises are those programs, activities, or fund sources that provide facilities, goods, or
services to faculty, staff, or incidentally to the public. These entities are generally self-supporting and
include the following:
1. Campus Auxiliaries
a. The California State University, Hayward Foundation, Inc.
b. The Cal State Hayward Educational Foundation
c. University Union of California State University, Hayward
d. Associated Students, California State University, Hayward
2. Student Housing
3. Parking
4. Extended and Continuing Education
5. Student Health Services
6. Lottery
7. Other Trust and Reimbursed Accounts
General Fund Supported Units Defined
For purposes of cost allocation, General Fund Supported Units are those Administrative Services Areas that
provide:
1. Supplemental facilities, goods, or services to other General Fund Supported Units
2. Facilities, goods, or services to Auxiliary Enterprises
3. Incidental facilities, goods, or services to non-University entities
Administrative Services Areas include the following:
Executive Administration
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Business and Financial Services
Accounting and Fiscal Services
Audit and Tax Services
Payroll Office
Procurement and Support Services
Facilities Reservations
Risk Management and Insurance
Budget Office
Operation and Maintenance of Plant
Facilities Planning and Management
Custodial
Utilities
Grounds Maintenance
Building Maintenance
Environmental Health and Safety
Depreciation and Usage Allowance
Institutional Research and Analysis
Administrative Management Information Systems
Human Resources
Public Safety
Cost Reimbursement Principles
The general principles listed below will guide the implementation of the Cost Allocation Policy:
1. A General Fund supported unit is entitled to cost reimbursement for
a. Supplemental services provided to another General Fund supported unit,
b. All services provided to an Auxiliary Enterprise, and
c. All services provided to a non-University entity.
2. An Auxiliary Enterprise is entitled to cost reimbursement for
a. Supplemental services provided to another Auxiliary Enterprise,
b. All services provided to a General Fund supported unit, and
c. All services provided to a non-University entity.
3. The University may charge different rates depending upon the relationship of the entities
providing and receiving facilities, goods, or services
a. The University rate applies to:
i. Supplemental services provided by one General Fund supported unit to another
General Fund supported unit
ii. All services provided by a General Fund supported unit to an Auxiliary
Enterprise
iii. All services provided by an Auxiliary Enterprise to another Auxiliary Enterprise
iv. All services provided by an Auxiliary Enterprise to a General Fund supported
unit
b. The Full-Cost rate applies to
i. All services provided by a General Fund supported unit to a non-University unit
ii. All services provided by an Auxiliary Enterprise to a non-University unit
4. General Fund supported units that provide services related to major or minor state-funded capital
fund projects are not entitled to cost reimbursement.
5. Either of the following methods may be used to implement these cost reimbursement principles
a. Memoranda of Understanding (MOUs)
b. Chargeback rates
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Cost Allocation Methodology
Direct Costs
Costs that can be readily assigned to a particular entity or program will be charged directly to that entity or
program when possible. Otherwise, the entity or program receiving the facilities, goods, or services will
reimburse the entity via a transfer of the expense or a direct payment of the actual costs incurred.
Indirect Costs
Costs that cannot be readily assigned to a particular entity or program will be allocated to the non-General
Fund supported entity or program receiving the facilities, goods, or services based on the Cost
Reimbursement Principles outlined above, according to the following methodology:
Facilities
Reimbursement Required
Reimbursement will be expected only when an Auxiliary Enterprise has exclusive use for more than one
month of space that is supported by the General Fund. Use of campus space by an Auxiliary Enterprise
that qualifies for reimbursement should be documented by a MOU.
Reimbursement Calculation
If not otherwise specified in the MOU, reimbursement to the General Fund will be calculated based on
square feet multiplied by the State General Services rate per square foot.
Invoicing and Recording Reimbursements
If use of space by an Auxiliary Enterprise is for less than a full fiscal year, the auxiliary will be invoiced at
the end of each applicable quarter of the fiscal year. If use by the Auxiliary Enterprise is expected to cover
the full fiscal year, the auxiliary will be invoiced once in mid-fiscal year for the entire year.
Reimbursement revenue will be recorded in the Reimbursed Activities Fund and an equivalent amount of
expenses will be charged to the Reimbursed Activities Fund.
Goods
Reimbursement Required
Every effort should be made to identify goods purchased by the campus that will be used or consumed
exclusively by an Auxiliary Enterprise in advance of purchase, so they may be charged directly to the
Reimbursed Activities Fund. Reimbursement for goods already purchased from General Fund resources
will be expected only when identifiable goods of significant cost are used or consumed by an Auxiliary
Enterprise.
Reimbursement Calculation
Reimbursement will be limited to actual cost, with no markup by the campus unit that initially purchased
the goods.
Invoicing and Recording Reimbursements
Reimbursement revenue will be recorded in the Reimbursed Activities Fund and related costs will be
charged to the Reimbursed Activities Fund.
Services
Reimbursement Required
Reimbursement for services provided to an Auxiliary Enterprise that are supported by the General Fund
will be expected only when substantial, identifiable services that generate an incremental cost are provided
for more than one month. However, any significant out-of-pocket cost incurred by a campus department
specifically to meet the needs of an Auxiliary Enterprise (such as contracted services) will be eligible for
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reimbursement, regardless of the length of the service period. A MOU should be created to document the
services to be provided and related terms and conditions.
The reimbursable costs of services provided to Auxiliary Enterprises will include:
1. Salaries and wages
a. Supervisory personnel will be included through first level of supervision only (i.e., no
allocation of general management costs).
b. Individual employees for whom a fixed portion of their work assignment is providing
services to Auxiliary Enterprises will be treated as direct costs of providing services to
those auxiliaries.
c. Other personnel will be grouped according to the Administrative Services Area providing
the service. Allocations will be based on workload measures and made in proportion to
those types of services provided to Auxiliary Enterprises.
2. Benefits
Benefit costs will be estimated as the average cost of benefit as a percentage of salaries. The
average cost percentage will be computed annually.
3. Operating expenses
The cost of supplies and services for a group that provides services to Auxiliary Enterprises will
be allocated in the same proportion as salary and wage costs.
4. Specialized equipment (including computer equipment, printers and copiers, but excluding
furniture)
Equipment costs will be charged directly to the Auxiliary Enterprise.
Reimbursement Calculation
The methodology for computing the cost of services provided to Auxiliary Enterprises by Administrative
Services Areas is as follows.
1. An Administrative Services Area is a department, unit, group or individual employee is identified
as providing substantial services to one or more Auxiliary Enterprises.
2. It is determined that providing services to the Auxiliary Enterprise causes the Administrative
Services Area to incur incremental costs.
3. The costs enumerated above are computed for the Administrative Services Area providing specific
services to both General Fund units and one or more Auxiliary Enterprises. (Note: The costs of
an Administrative Services Area providing a service only to a single Auxiliary Enterprise would
be treated as a direct cost reimbursable by that auxiliary.)
4. An activity base or workload measure is identified for the services provided.
5. The activity base or workload measure is used to allocate costs to General Fund units as a group
and among Auxiliary Enterprises receiving services.
Invoicing and Recording Reimbursements
If services are provided to Auxiliary Enterprises for less than a full fiscal year, the auxiliary will be
invoiced at the end of each relevant quarter of the fiscal year. If the Administrative Services Area expects
to provide services for the entire fiscal year and an MOU fixes the agreed amount of reimbursement, the
auxiliary will be invoiced once in mid-fiscal year for the entire year.
Reimbursement revenue will be recorded in the Reimbursed Activities Fund and an equivalent amount of
expenses will be charged to the Reimbursed Activities Fund.
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